Govt Debt Soars to Rs. 40.28 Trillion By October End

Pakistan’s central government debt increased to Rs. 40.279 trillion, indicating a 13.44 percent hike year on year. It stood at Rs. 35.5 trillion at the end of October 2020.

According to the data released by the State Bank of Pakistan, the external debt rose by 19.4 percent (YoY) to Rs. 13.811 trillion in October 2021 from Rs. 11.57 trillion in the same month last year, highlighting an increase of Rs. 2.241 trillion. This increase was mainly due to the appreciation of the US Dollar against the Pakistani Rupee and recurrent inflationary pressures that impeded fiscal progression on a consistent basis.

In the period under review, the domestic debt of the central government has surged by Rs. 2.532 trillion to Rs. 26.468 trillion in October, as compared to Rs. 23.936 trillion in the same period last year.

The government’s main source for borrowing was through federal government bonds that soared by Rs. 545 billion to Rs. 15,994 trillion in October 2021 from Rs. 15.449 trillion in September 2021.

The domestic debt declined to 49 percent of GDP from 56 percent last year. Similarly, the external debt to the GDP was recorded at 26 percent of the GDP from 28 percent last year. It is pertinent to mention that the best way to evaluate the debt trend is through the debt to the GDP measures.

Meanwhile, the foreign exchange reserves held by the SBP fell by 1.2 percent on a weekly basis according to data released last week. The reserves declined by a whopping $275 million to $22.499 billion from the reserves recorded by the central bank.